Canadians face new headaches after language school goes bankrupt

Hundreds of Canadians who lost their jobs following the collapse of Japan’s largest chain of language schools are now faced with another frustration: Today they will lose all of the health coverage provided to them by their former employer.

Nova, a well-known company that taught languages to an estimated 400,000 students, filed for bankruptcy protection last Friday. Reports from Japanese media suggest that the company had fallen into heavy debt, estimated at $370 million.

The company employed more than 6,000 workers at its peak — two-thirds of whom were believed to come from foreign countries, including 668 from Canada.

Since filing for bankruptcy, Nova has been taken over by government-appointed trust-ees. For a 10-day period, which began Oct. 27, the trustees will look for potential buyers to take over the company and its associated debts.

As of yesterday, the government reported “negotiating with a number of companies,” but did not specify the names of those companies.

On a letter posted to its corporate website on Tuesday, the trustees informed teachers that Nova could no longer afford to pay their health insurance costs.

“We regret to inform you that all … policies will terminate as of October 31, 2007,” the statement read.

“We ask that those who require immediate coverage for illness and injury … to find and join another insurance scheme.”

For those working for Nova, it was the latest in a series of signs that things have taken a turn for the worse.

Pay delays in the months prior to the bankruptcy meant Nova employees received letters from Japanese landlords asking why their automatic rent deposits had not been made by their employer.

Nova, in turn, sent out faxes with various explanations for the delays.

Phuong Du, a 25-year-old Toronto native, moved to Japan last April to work for Nova.

While the experience was generally good, she said yesterday the last two placements have been stressful. The school has been closed for three weeks and she hasn’t been paid in more than a month.

“It’s kind of crazy, kind of hectic,” Ms. Du said.

But it could be worse. She has heard of cases in which teachers have been evicted from their apartments and knows a teacher who has not been paid since he started his job in September.

In her case, she saved enough money to wait out the situation and has private health insurance that is not affected by the Nova bankruptcy. But she knows how hard it has been for other teachers.

“A lot of instructors are living kind of day by day,” she said.

“A lot of instructors, too, have families as well, so they have to take care of more than just themselves.”

And those who have lost their jobs have one more possibility they must consider: The costs associated with packing up their lives and moving home.

“I can’t afford to stay,” Christine Ley, a Nova teacher originally from Collingwood, Ont., said yesterday.

Ms. Ley, 23, who has taught in Japan for 11/2 years, said she feels “forced” into a position that will leave her in debt.

“It’s a pretty upsetting feeling, knowing that you’re being forced to leave and not by your own decision,” she said.

“I intended to stay into the new year, but now I’ve had to change my plans and go home without the savings, which I needed to go back to university.”

Nova fell into financial problems in recent years despite having a sizable market share and established clientele. According to its corporate website, Nova offered its students language lessons 24 hours a day and held up to 60 per cent of the private language education market in Japan.

Reports out of Japan this week have suggested former Nova president Nozomu Sahashi had managed the company poorly — and had recently turned down at least one offer from another company to form a partnership and infuse cash into the struggling Nova.

Forbes.com reported yesterday that Mr. Sahashi turned down a $55-million cash injection offer from Japanese retailer Marui in a proposed business deal last May. As part of the deal, however, Mr. Sahashi would have had to step down from his post as company president.

Those who have worked for Nova in the recent past say the bankruptcy was not an unforseen development.

David Carson, a former Nova teacher and Ottawa native, said in an interview earlier this week that the company had used “assembly-line style” teaching in its schools for years — something he thought could one day land the company in trouble.

“There was always a little bit of talk,” Mr. Carson said, referring to his experience with the company between the fall of 2003 and January 2005.

“It was kind of on the backburner then that (Nova) might not be as successful as they appeared on the surface.”